Enron still wreaking havoc
With Ken Lay and Jeff Skilling currently in trial, and the former Enron headquarters empty, you might be tempted to think the old corporate monster has been vanquished. But you would be wrong: There is still the fallout to be reckoned with.
On Monday, The Seattle Times reported on the Snohomish County Public Utility District (PUD) which has been fighting Enron over the inflated electricity rates during the West Coast energy crisis. Enron creditors are looking to get Snohomish PUD to pay over $100 million in contract cancellation fees and seeking to pay "22 cents on the dollar for $40 million in overcharges that the PUD claims were caused by Enron's market manipulation." That would mean that Snohomish residents could be looking at a 25 percent increase in electricity rates.
Enron lobbyists have approached a group of senators that have been fighting on PUD's behalf, asking them to back off. The senators have written the Federal Energy Regulatory Commission (FERC) to oppose a settlement under these terms. This letter may just end up on the desk of Phil Moeller -- a recent nominee to a FERC vacancy. As The Seattle Times notes, "It could be an awkward issue for Moeller because Lay recommended him for FERC in early 2001 in a letter to the George W. Bush transition team."
Yesterday, Senator Dianne Feinstein (D-Calif.) and Maria Cantwell (D-Wash.) filed a FOIA request to FERC -- asking for the release of hundreds of hours of tape recordings between Enron officials. The FERC's ongoing Enron investigation has uncovered many recordings that remain sealed. Truly dastardly: Enron's proposed settlement with FERC regarding PUD would "require FERC staff to work to prevent the release of Enron evidence that remains sealed."
That evidence is important because it could prove instrumental in future crafting of federal policies on trading in energy commodities. Senator Feinstein writes,
It's now clear that fraud and manipulation were a major part of the West Coast energy crisis in 2001. Thirty-two companies have already pleaded guilty or settled $6 billion in claims. Yet, many of the same traders who rigged the market are still trading energy commodities," Senator Feinstein said.
As an example, according to media reports, one of the Enron traders who booked $750 million in natural gas contracts in 2001, subsequently started Centaurus Energy, a hedge fund company that trades energy commodities. When he was asked during a deposition about whether he had ever manipulated the Western energy markets while at Enron, he took the 5th Amendment and refused to answer. This man was never prosecuted, and is now trading energy commodities that are not subject to federal oversight.Senator Cantwell adds,
The American people have a right to know the full extent of Enron's schemes to exploit consumers and steal millions from Western ratepayers. Keeping hundreds of hours of audiotape locked away will make it more difficult to prevent this kind of massive rip-off in the future.Let's hope they succeed, because we're not getting an further insight from Ken Lay (unless you count a more concrete picture of the depths of his greed) who recently took the stand.
Here's a snippet from the proceedings:
Lay spent nearly $200,000 in February 2001 to charter a boat named "Amnesia" to celebrate his wife's birthday. In April, he spent $12,000 to go to a resort to celebrate his birthday, he said.
"My birthday was cheaper than my wife's," Lay joked.